ICT Sector can Play an Important Role in Export Diversification

Hiren Pandit: The government believes that digital devices and IT products like mobile phones, computers, and laptops will play a significant role in capturing the potential market of 10 billion dollars in the information technology sector in the country and abroad within the next four years.

As a part of this, the Information and Communication Technology (ICT) Division has taken a ‘Made in Bangladesh’ roadmap for expanding the scope of setting up digital device manufacturing industries in the country and branding local products in international markets.

If this roadmap is adequately implemented, employment of at least one lakh people will be ensured in the country’s IT device manufacturing industry. Laptops and mobile phones will be exported abroad to meet the domestic demand of about 200 million dollars prepared by the ICT Division. The ICT Division hopes that if the ‘Made in Bangladesh’ action plan is implemented, Bangladesh will become one of the centers of ICT and IoT (Internet of Things) product manufacturing. It will also help implement the government’s Digital Access for All agenda.

Bangladesh is expected to earn a 5-billion-dollar export income from the IT sector by 2025. At least one lakh people are expected to be employed in the country’s IT device manufacturing industry. A roadmap of $5 billion in export earnings from the IT sector by 2025 has been set. In the information technology sector, a plan has been made to increase the export earnings of digital devices made in the country from about one billion dollars to 5 billion dollars by 2025. At the same time, the domestic market for ICT products and IT-enabled services is also expected to reach $5 billion.

The growing demand for digital devices and consumer gadgets by the country’s emerging middle class and affluent class has created a conducive environment for Bangladesh’s entry into the international hi-tech industry. The roadmap recommends prioritizing using locally produced ICT products in government procurement. Initiatives have been taken to increase the awareness of officials of government agencies involved in procurement. Besides, efforts are being made to set up hubs in Singapore, Dubai, England, or any other country to facilitate the export of products produced there.

The new roadmap emphasizes various issues, including the creation of skilled manpower, improvement of product quality, quality assurance, assessment of global demand, increase of the image of Bangladeshi products worldwide, protection of intellectual property, and increase of research.

In addition to the ICT Division of the government, the Ministry of Commerce, Ministry of Foreign Affairs, Ministry of Planning, Department of Posts and Telecommunications, Ministry of Industry, Ministry of Education as well as various ministries, including Bangladesh Computer Council, Bangladesh Hi-Tech Park Authority (BHTPA), Bangladesh Economic Zone Authority (BEZA), Bangladesh Investment Development Authority (BIDA), Bangladesh Export Processing Zone Authority (BEPZA), Export Promotion Bureau (EPB), BSTI, BITAK, Skill Development Authority and University Grants Commission are working together. To make the roadmap a success, various non-governmental organizations, as well as various organizations of entrepreneurs, will have essential responsibilities.

According to the International Data Cooperation (IDC), Bangladesh imported 3.4 million mobile phones in 2017, worth $1.18 billion. In 2018, the company estimated the laptop market of this country at 300 million dollars. Bangladesh Hi-Tech Park Authority (BHTPA) was established to exploit this potential domestic market. A series of incentives are being offered for this. BHTPA announces income tax concessions for IT park founders and investors. Besides, additional duty exemptions, including exemption from import and regulatory duty, will be given to the manufacture of ATM kiosks and CCTV cameras in the country. Besides, investors will also get a duty exemption on the import of capital machinery and construction materials. The new roadmap has been prepared to accelerate the ‘Made in Bangladesh’ initiative by utilizing these benefits.

Moreover, the availability of the labor force in a relatively competitive 7-level structure, local market demand, and the supportive framework of government policies are essential influencers in making Bangladesh an attractive market for digital device manufacturing.

Citing the examples of those who have already successfully set up production lines in Bangladesh – Walton, Samsung, Oppo, and Data Soft, the department says that these initiatives have highlighted the possibility of further development in the local device manufacturing industry in the future. However, the Information and Communication Technology Division has also identified some obstacles to implementing the roadmap, among which is the high capital expenditure in Bangladesh, which has been placed at the top. Besides, lack of skills, weak industry support ecosystem, problems of quality assurance and international certification of locally manufactured products, lack of valuable regulations to prioritize local products in government procurement, lack of public awareness about local products, and lack of financial incentives for digital device manufacturers are identified as significant issues. Strategic Aspects: The roadmap has been formulated, emphasizing four strategic themes. These include local capacity-building in the public and private sectors, awareness creation and branding, research and development, and policy support. Under this, there are some action plans in the short term to be implemented by 2023, medium term to be implemented by 2028, and long term to be implemented by 2031. In the short term, the domestic and international markets of technology products will be analyzed, and strategies for demand assessment, capacity development, and marketing will be formulated.

The country’s software development and solutions sector has reached a stable position. We need to strengthen the hardware industry to keep up with the software industry. Although dozens of companies manufacture mobile phones nationwide, few are ready to manufacture laptops. Local factories will only initially add digital devices.

Emphasis should be placed on job creation and increasing value addition. This roadmap was instrumental as there is still very little investment in setting up hi-tech parks. There is a lack of coordination among various ministries and departments of the government in providing support to the digital device industry. Investments will also increase if the new roadmap ensures coordination.

The ready-made garment sector, or RMG, is a successful model for Bangladesh’s exports. Now is the time for other promising sectors like leather, textiles, pharmaceuticals, ICT, and light engineering to come forward. Bangladesh has started formulating a long-term plan to increase the scope of its exports after its transition from the United Nations Least Developed Countries (LDCs). These related measures may include low-cost and easy access to finance, adequate policy support, and financial and non-financial incentives for the non-apparel export sector to ensure equal treatment and skill development. Should we focus more on non-apparel sectors with good export potential?

Agencies concerned should implement domestic regulations that are WTO compliant, as industry preparedness is critical. Also, the Bangladesh Standards and Testing Institute (BSTI) must be strengthened so that local products are subjected to international quality tests to ensure their accreditation. The country’s legal capacity must also be enhanced as trade disputes may increase significantly during the LDC transition phase. Small and medium industries such as jute, agro-processing, leather products, footwear, pharmaceuticals, light engineering, ICT, and other emerging sectors have to face competition to compete in the international export market after graduation—traditional industries and geographic diversification and service sectors.

We also need to facilitate more exports to countries in Latin America, Africa, Asia, and the Middle East, as well as the EU and the US. Authorities should identify the benefits of signing free trade agreements or preferential trade agreements without considering only potential revenue gains. Bangladesh earns $1 billion from the jute sector, but considering global climate change and increasing international commitments for sustainable development, the industry could grow from $5 billion to $10 billion.

Jute is now used in various products and has become the world’s second most sought-after natural fiber. So, we must add value to this sector to be competitive after graduation. About 70 percent of Bangladesh’s total arable land is used for rice production, which employs about 45 percent of the country’s rural labor force. We must increase technology adaptation, increase private sector research and innovation, adopt good agricultural practices, and develop the country’s post-harvest capacity and brand.

The local ICT sector earns about $1 billion a year, but not everything is reported on time due to the lack of a digital wallet or a payment system like PayPal. We need to create a low-cost fund to ensure unconventional access to finance for the development of this sector. About 80 percent of the drugs exported from Bangladesh are off-patent. Bangladesh’s policymakers have discussed export diversification for over two decades. This is also one of the actions of the recently concluded ‘Bangladesh Trade and Investment Summit’, which reiterated the importance of policy and legal reforms to harness untapped business potential at home and abroad. Bangladesh has depended on almost one sector for its export earnings. No one knows when the 84 percent share of readymade garments in exports will come down with healthy growth in other industries and manufacturing components.

As a result, numerous policies lose the timeliness of implementation and adoption appeals. During this period, new problems arise, and old ones remain incomplete. The authorities then adopt new policies and initiatives understandably to draw political dividends, only to forget the records remembered by businessmen. The concept of a special economic zone is attractive, and Bangladesh authorities have created as many as 100 to use as game-changers for the economy and to attract investment. However, the related companies do not consider the necessary facilities and environment for making investment decisions.

Hiren Pandit is an essayist, researcher, and columnist based in Dhaka, Bangladesh. He can be contacted at hiren.bnnrc@gmail.com

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